ICMM Guidance > Good Practice Guide to Indigenous Peoples and Mining > Tool 10 – Making Agreements

Tool 10 – Making Agreements

Much of the information you have read and created in the previous tools eg baseline studies and impact assessments, is highly important in negotiating agreements with indigenous communities.

Agreements need to be clear and realistic. It can take time to build knowledge, understanding and respect; negotiations have been known to take as long as five years. “Good faith negotiation” will help you establish a healthy, sustainable relationship.

The outlining of company interests, plans, risks and opportunities must be explained and understood with full community involvement.

Long-term objectives should be established at the outset. These should also include the duration and extent of company support and institutional arrangements for any remaining assets and finances covered by the agreement.

Step Guide

STEP
1

Identify who the agreement should be made with and potential issues, such as:

Company support of community projects and initiatives
Financial payment arrangements
Employment and contracting opportunities
Impact management, avoidance and mitigation
Sharing benefits and promoting long-term sustainable development
Governance arrangements
Provisions in relation to the local community’s use of land

STEP
2

Decide on financial packages:

Production-based or profit-based payments – annual payment for use, based on a percentage of production profits
Equity – a share of project ownership and subsequent share of dividends paid to shareholders. In return for financial payments or recognition of support from the indigenous group, or rights the group has over the resource
Fixed annual payments including – benefit sharing, social investment payments, proportion of the total capital expenditure of the project
Fixed single payments – fixed and sometimes one-off made for either reaching agreed milestones, redressing damage/loss or a right of way payment

STEP
3

Decide on type of financial disbursement mechanisms. These need to be consistent with the broader purposes and objectives with the agreement working towards a sustainable future:

Payment to named individuals or groups
Payment to an indigenous group through an organisation eg a bank account held solely be the group or shared jointly with the company
Payment through an intermediary organisation eg government or NGO to the group or company
Payment into a company internal fund or program specially set-up on behalf of the indigenous group
Payment into an external trust, fund or foundation with the specific purpose of managing and disbursing funds

STEP
4

Consider adding to the agreement potential employment and contracting opportunities:

Explicit action and timeline targets in relation to employment and business development
General statements of commitment to preferentially employ/contract Indigenous Peoples

STEP
5

Set environmental, cultural and social management terms to provide indigenous groups with some level of assurance and accountability

STEP
6

Create a liaison committee of both indigenous and company representatives with clearly defined roles, functions, jurisdictions and powers. The committee will deal with:

Implementation issues
Providing a forum for addressing disputes
Financial governance arrangements eg the creation of trust mechanisms with defined spending priorities, independent investment advice and external financial oversight
Document processes for resolving disputes over the interpretation and application of agreement provisions. Look at tool 13 and tool 14 for further information
Providing continuous monitoring and reporting on activities in the agreement, compliance of key provisions, and actions taken to address issues from all parties. Public reporting should also be considered
Building in regular reviews to assess progress against the objectives of the agreement and modify and refocus the agreement where necessary

Sharing decision-making power and control

In relation to governance arrangements companies need to consider whether, and under what circumstances, they are willing to share decision-making power and control with indigenous groups and their representatives.

Giving Indigenous Peoples a voice in the future direction of the project creates a sense of shared responsibility, builds confidence about the project and can promote potential future community support.

Companies should be prepared to provide financial and in-kind support for capacity-building activities in areas such as:

Legal and negotiations training
Development of leadership skills
Meeting procedure
Institutional governance and board member responsibilities
Business development and management

Internal disagreements

Companies must ensure all internal tensions and disputes are resolved before entering into negotiations with indigenous communities
Potentially impacted departments should understand the issues likely to be discussed in negotiations and kept informed of the company’s position on these matters
Where indigenous communities are divided over agreement outcomes companies should work with the community to create special subgroups for wider consultation
It is important that members of the community do not feel disenfranchised
Representatives must understand issues so they can represent the interests of all

Confidentiality clauses

Consider what information should be made public and what may be sensitive and remain confidential
Look at whether the local jurisdiction has any confidentiality requirements – in some areas transparency initiatives are mandated by law and require companies to disclose payments they make to governments worldwide
Consider whether the community has any concerns about sharing sensitive information

Community, Economics, Environment, Ethical Business, Management, Rehabilitation

Raglan Mine – Accessing Royalties and Profit-Sharing Mechanisms

Paving the way for a range of financial benefit-sharing measures in Canada.